Cable TV digitisation: long march to Mrs Malhotra’s house
A dummies guide to Ambika Soni’s day-long consultations on Friday. Can she bring transparency and digitization to how “Mrs Malhotra” watches on her cable across Delhi, Mumbai, Kolkata and Chennai from July 1? The one word answer is “no.”
What’s going on?
The government, Soni on the driver’s seat, has mandated that cable homes in India’s four metros must migrate to digital mode by July 1, 2012. Violation has been made a cognizable offence and entails a jail term and fine.
How will that help Mrs Malhotra?
It would, if the miracle happens on July 1 and migration does take place. Since Mrs Malhotra still has cable TV, her operator will offer her better transmission quality by squeezing more channels through the same pipe. Thus several niche channels which don’t reach the Malhotra residence at the moment. Also, the cable guy could even be giving the Malhotras more attractive scrolls and localized advertising.
Will she pay more for this?
Discounting the big `if’ on whether July 1 is a mere date, and government’s writ and persuasion is all set to be torpedoed, Mrs Malhotra may not have to pay more for digitization. Instead, if digitization happens, for the same money, she could get better value for her buck.
But there’s a big `if’ here.
Pray, what’s the big `if’?
Let’s look at three out of the most compelling ones.
First, the current regime of cable television has very smart players who are controlling a bulk of money in the system. For instance, the monthly subscription money that Mrs Malhotra and 99 of her neighbours pay to the cablewalla, is under declared by 50-80 per cent. Thus the TV channel who shares their signal with him is told that only 20-50 homes exist in the network instead of 100 from whom actual money has been collected. The channel’s share of this collection is thus limited to what the cablewalla is willing to declare. The remaining collection adds up a fairly large pot of black money. The Central Board of Direct Taxes has little handle on it, nor does the service tax directorate. Not surprisingly, as a rule of thumb, no incumbent player or the money mafia riding on the analog service, wants digitization, if he can help.
The second `if’ to July 1 is that the mom-and-pop cablewalla we knew while growing up isn’t the same any more. Typically, he’s been joined by a son or daughter armed with some sort of professional/firangi degree. More significantly, this person has freed their roof of massive dish antennas and sold out to a bigger fish, called MSO (multi-system operator). In a word, the MSO operates on the basis of economies of scale and coordinates with the land and police underlings, and the suppression of actual numbers. Now, most MSOs are under prepared for a July 1 migration. To get there, they need doses of technology and software at their own premises, plus several thousand set-top boxes (STBs) in each cable home under their umbrella. The centralized software and hardware needs to be paid for. MSOs and mini-MSOs would like to have it free and then pay along the way. Serious technology companies like NDS would want to tell Mrs Malhotra that they are exploring various options. But no one has the entire package. NDS’s Jayant Changrani, for example, undergoing a buy-out, so under law he has to maintain a Chinese Wall with his company’s new owners.
There are indeed MSOs who don’t have enough STBs. Imports of such a large-scale are neither feasible nor, perhaps, all that desirable given the outflow of foreign exchange. (That said, an Indian STB, of the quantities that are needed, will remain a chimera for the next 4-5 years.)
Third, there are obvious gainers from the confusion. Rating agency TAM is one of them. At present, they intermediate in the advertising sweepstakes via a fuzzy system where some 7,200 people meters are installed in various geographies purportedly representing some 135 million tv homes like Mrs Malhotra’s. Digitization would mean niche channels who are presently resigned to their fate demanding finer data on who really is watching them. For LV Krishnan of TAM, this means acquiring more people meters. But someone has to pay for them: TAM’s existing subscribers, certainly the ones controlling the present-day ratings, are least interested to do so. On the flip side, Soni’s key civil servant Rajiv Takru never makes his distaste for TAM much of a secret. So do all other bureaucrats. Nobody in Shastri Bhavan believes that LV’s meters reflect the power of Doordarshan.
What of political support?
Politically, if not so much Kolkatta and Delhi, Chennai is clearly a hot potato. Here the Maran brothers control nearly 80 per cent, if not more, of the cable business (as also across the state). And chief minister J Jayalalithaa is reviving a state-owned cable company to give the Marans a run for their money. It is hard to conceive Soni managing to arm twist either the Maran brothers or Jaya’s boys and cancelling their licence (what of cancellation, such is the regulatory black hole that most cablewallas in India don’t even know that a licence exists). Fines and/or packing them off to jail are hardly the stuff realism is made of.
Similarly, Mumbai MSOs are claiming they don’t have STBs. Arresting them or fining them while a Congress government is in power requires conviction that hasn’t so far been New Delhi’s hall mark.
Amidst the inevitable confusion, there are the ones who control services like direct-to-home (DTH). This is an obvious opportunity for them to invite Mrs Malhotra to migrate. Not surprisingly, a Dish TV-affiliate company has allowed some cablewallas to become DTH resellers. That’s smart thinking because unlike the present distribution model of DTH which is prepaid, newer payment options are possible if the cablewalla, given his last-mile connect, becomes a post-paid DTH reseller.
So, what happens now?
The television broadcasters want digitization quite badly. They claim to be bleeding dry paying carriage fee to select MSOs, because these are the guys who are on TAM’s meters. Viewership only among those MSOs translates into advertising. A complete shake up in how this data emerges serves all laggards, principally Doordarshan which like Takru, has never reconciled to being at the bottom of TAM’s pile, but no channel knows where their ratings will stand post complete digitization.
That said, for now, all pure-play content companies, from Prannoy Roy’s NDTV to Aroon Purie’s TV Today, just want the carriage fee gorilla off their backs.
If they were fighting someone else’s battle, India’s top content barons can rattle enough fire power to have a deadline respected. It isn’t the same thing championing their own cause.
Thus the ultimate question: do they have the muscle to pressurize an effete government read the riot act? My wager is `no.’ Not forever, but I’ll bet more money that the law won’t be enforced in letter and spirit by July 1. A letter written by Zee’s Subhash Chandra to Soni suggesting that delay, if inevitable, is limited to 2-3 months, not later, gives the cat away.
Mrs Soni is determined and has said quite often that she isn’t scared of walking away from her ministerial berth and work for the party instead. Today’s political face saver was an MSO-wise compliance report!
(Tweets @ therohitbansal)